Scandinavian CoCos, China Parts, U.K. Banks: Compliance

July 21 (Bloomberg) -- Scandinavian banks are set to
increase the issuance of contingent convertible debt as soon as
regulators in Sweden and Norway set guidelines for the
securities, Standard and Poor’s said.

Banks have until 2021 to replace convertible debt that no
longer meets regulatory requirements. European regulators
tightened standards for hybrid capital -- which pays a coupon,
like debt, but can also absorb losses, like equity -- after
older securities failed to protect lenders from insolvency
during the financial crisis.

Denmark has already set triggers that tell investors when
their CoCos convert or get written down. Sweden, the region’s
biggest banking market and home to Nordea Bank AB, may see
trigger requirements approved as early as next month as part of
wider capital discussions, according to Swedbank AB. Norway will
decide “later this year,” said Emil Steffensen, deputy
director general of the Financial Supervisory Authority in Oslo.

China Said to Be Probing Foreign Automakers Over Spare Parts

China is examining whether foreign auto manufacturers are
preventing component makers from selling spare parts to any
dealers besides those authorized by the car companies, people
familiar with the matter said.

The National Development and Reform Commission, China’s
economic planning body, is probing practices at Stuttgart,
Germany-based Daimler AG’s Mercedes-Benz, Volkswagen AG’s Audi,
Munich-based Bayerische Motoren Werke AG and Japanese carmakers
to see whether prices of spare parts are being artificially
boosted, the people said, asking not to be identified because
the probe hasn’t been made public.

Chinese state media have criticized car producers from
abroad for overcharging consumers for spare parts.

BMW and Wolfsburg, Germany-based Volkswagen declined to
comment, while representatives at Mercedes said they weren’t
aware of an investigation of the company. The NDRC didn’t reply
to a fax seeking comment.

Compliance Action

U.K.’s Big Banks Face Probe Into Checking Accounts, Lending

Britain’s largest banks face a full investigation into
small-business lending and checking accounts as antitrust
regulators said the industry lacks effective competition.

The four largest lenders control more than three-fourths of
the U.K. consumer banking industry, and there are significant
barriers to new banks, the Competition and Markets Authority
said July 18 in a statement. The regulator said it would review
whether to start an in-depth investigation.

British lawmakers are seeking to loosen the grip of
Britain’s four biggest lenders -- Barclays Plc, HSBC Holdings
Plc, Lloyds Banking Group Plc and Royal Bank of Scotland Group
Plc -- which control more than 90 percent of the market for
small-business lending and have been hit by scandals.

The British Bankers Association said lenders will cooperate
with the probe.

Credit Suisse Poised for Biggest Loss Since 2008 After Tax Fine

Credit Suisse Group AG is poised to report its biggest
quarterly loss since the collapse of Lehman Brothers Holdings
Inc. after being fined $2.6 billion for helping American clients
evade taxes.

The bank tomorrow will post a loss of 701 million Swiss
francs ($780 million), hurt by a 1.6 billion-franc charge linked
to the fine, according to the average estimate of seven analysts
surveyed by Bloomberg. By contrast, larger competitor UBS AG may
log an 812 million-franc quarterly profit next week.

Credit Suisse’s loss would be the biggest since the fourth
quarter of 2008. Uncertainty surrounding the outcome of the
litigation and the bank’s guilty plea to criminal charges slowed
the flow of client money into the wealth management unit.

Credit Suisse Chief Executive Officer Brady Dougan said in
May he expected “very little impact” on the bank’s business
after its main Swiss unit became the first global lender in a
decade to admit to a crime in the U.S.

Interviews

RBS Chief Says Currency-Rigging Scandal May Top Libor Costs

Royal Bank of Scotland Group Plc Chief Executive Officer
Ross McEwan said in a radio interview July 18 that the foreign-exchange market scandal may be more expensive to the banking
industry than Libor or improperly sold loan insurance.

U.S. and U.K. authorities are investigating potential
manipulation in the $5.3 trillion-a-day global currency market
by banks around the world.

“The difference this time is that we haven’t sat back and
denied it,” said McEwan who succeeded Stephen Hester as CEO in
October. “We’ve gone into it and doing the investigation hand-in-hand with the authorities. And again, I’d like to see it
cleaned up as quickly as we can.”